Billabong’s new boss Neil Fiske insists his plan to revive the struggling surfwear label is different – and big investors seem to agree.
In his first dozen weeks as chief executive, the former head of resuscitated American adventure wear brand Eddie Bauer has vowed to slash Billabong’s product lines by up to 30 per cent.
At first glance, the strategy may look familiar.
Addressing last year’s annual general meeting, then CEO Launa Inman pledged to close underperforming stores and slash the number of styles, telling shareholders that “34 per cent of our styles account for one per cent of sales”.
Taking the podium this week at the same Gold Coast hotel, Mr Fiske pointed out how “40 per cent of styles generate only five per cent of our sales”.
But at a news conference afterwards, Mr Fiske insisted his plan to improve merchandising was different to his predecessor’s policy of cutting back on inventories, also known as stock keeping units or SKUs.
“With all due respect to Ms Inman, the strategy’s a little bit different,” he said.
“The previous articulation of that strategy was reducing SKUs by 15 per cent and that’s not a bad thing but in my view that doesn’t constitute merchandising strategy.”
Since Billabong’s AGM, its share price has risen from 32 cents to 46.75 cents, as of 1030 AEDT on Thursday.
IG Markets strategist Evan Lucas said institutional and private equity investors, rather than retail mum and dad shareholders, are endorsing Mr Fiske’s strategy to reconnect with 16 to 18-year-old consumers through social media.
“Billabong … is going to be a completely almost online brand,” he told AAP.
“It’s not a tomorrow story, it’s a year story to even a half a decade story but he certainly sounds like he could probably put Billabong back on a bit of a front foot.”
Billabong also appeared to have a strategy to reduce debt as it sold off Canadian fashion brand West 49, reduced “bricks and mortar” retail outlets and downsized European and Canadian operations.
“This plan, this strategy suggests that there’s a possibility,” Mr Lucas said.
Mr Fiske’s experience has been in the United States, as the chief executive of personal body care retailer Bath and Body Works and later as boss of Eddie Bauer.
The 52-year-old father of three college sons drew parallels with Billabong’s youth-orientated heritage, saying that at Eddie Bauer he returned the brand “to its roots … re-establishing its credibility with the authentic core consumer”.
The Eddie Bauer experience indirectly took him into American private equity groups Centerboard and Oaktree Capital Management, which in September struck a $586 million debt financing deal with Billabong, that included making Mr Fiske CEO.
He later pledged to make Billabong cool again with teenagers, but restoring the goodwill of the brand – which the company deemed worthless in August as it announced an $860 million full-year loss – is another challenge.
“The goodwill follows the results we post,” he said.
